US banks in joint Canary bid

Morgan Stanley and Goldman Sachs have joined forces to enter the auction for Docklands property group Canary Wharf.

A joint offer from the investment banking rivals is believed to have the provisional support of the New York Glick family, Canary Wharf's largest shareholder representing 15% of shares.

The banks hope to beat off an approach made last week by Canadian property group Brascan, which holds a stake of about 10%. The auction pitches Brascan against the Glicks, headed by Simon Glick. There is said to be no love lost between the two.

Goldman Sachs's Whitehall fund has allied with the Mor gan Stanley Real Estate fund because of the scale of the deal. Already highly geared, Canary Wharf is likely to fetch an equity valuation of more than £1.5bn at auction.

News of the joint bid will disappoint shareholders who had hoped involvement of both banks would create a three-way auction.

All eyes this morning will be on Paul Reichmann, executive chairman of Canary Wharf, who returned the group to the stock market in 1998 following its collapse into receivership.

Last week Mr Reichmann, who holds a 7.75% stake, confirmed he was in discussions about linking up with an outside bidder. It is unclear whether he is marshalling a third consortium to enter the contest. Three expressions of interest were said to have been lodged with Canary Wharf on Friday night.

Mr Reichmann is known to be close to a number of long-term shareholders, including Simon Glick, who all backed his efforts to rebuild the company. Other investors who may be influenced by Mr Reichmann's intentions are Franklin Mutual and CNA Financial, which together hold about 13%.

While Mr Glick is said to have given his his backing to Morgan Stanley and Goldman Sachs, the support is not believed to be irrevocable.

Analysts have struggled to agree on likely bid prices, with estimates ranging from 260p to 300p a share.